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Tcecarenko [31]
3 years ago
7

On June 30 (the end of the period), Brown Company has a credit balance of $2,185 in Allowance for Doubtful Accounts. An evaluati

on of accounts receivable indicates that the proper balance should be $28,305. Journalize the appropriate adjusting entry. If an amount box does not require an entry, leave it blank.
Business
2 answers:
asambeis [7]3 years ago
8 0

Answer:

Dr Bad debt expense 26,120

    Cr Allowance for uncollectible accounts 26,120

Explanation:

The allowance for uncollectible accounts represents the estimated amount of credit sales that the company doesn't expect to collect, i.e. bad debt. This account is a contra asset account that reduces the amount of accounts receivable, that is why it has a credit balance. It is not reported in the balance sheet, since only net accounts receivable is reported.

Bad debt expense is an expense account that must have a debit balance as any other expense account.

allowance for uncollectible accounts = $2,185 + $26,120 = $28,305

Olegator [25]3 years ago
7 0

Answer: The appropriate entry is journalized as follows:

                                                         Debit ($)                                   Credit ($)

Bad debt expense                            26,120

Allowance for doubtful accounts                                                       26,120

<em>(Being entries to record additional bad expense provision)</em>

Explanation: Bad debt expense is an estimate of the amount of accounts receivable that is deemed uncollectible meanwhile allowance for doubtful accounts is a balance sheet allowance account for bad debt and is usually deducted from the accounts receivable to show the actual amount of accounts receivable that is recoverable.

The $26,120 above was arrived at as the difference between $28,305 and $2,185.

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